Dalio’s privacy concern aligns with his view that state actors require discretion in reserves management—something a public, traceable ledger cannot provide. His code-risk comment echoes disclosures from BlackRock’s iShares Bitcoin Trust (IBIT), which cautions that advances in mathematics and computing—including quantum computing—could one day undermine the cryptography securing Bitcoin. BlackRock’s filings also note that past software flaws in digital-asset systems have exposed users or enabled theft, and any broad loss of confidence in crypto code would likely hit Bitcoin’s value. 

For now, neither BlackRock nor Dalio suggests an imminent technical break; rather, both flag a tail risk that grows with future computing power. That distinction helps explain Dalio’s stance: he keeps a small BTC allocation as a hedge, but sees gold as the sturdier long-term store of value and views central-bank adoption of Bitcoin as unlikely.  

The paper, authored by Amol Amol and Erzo Luttmer of the University of Minnesota, was released on October 17 and explores the implications of ongoing fiscal imbalances. A permanent primary deficit occurs when a government consistently spends more than it earns from taxes, excluding interest payments on its existing debt. This scenario creates a persistent financial gap that typically requires borrowing to cover the shortfall.

While economists often view a permanent primary deficit as sustainable only under conditions of manageable borrowing rates or robust economic growth, Amol and Luttmer suggest that governments can maintain such deficits through specific strategies. They argue that in an economy with incomplete markets and risk-averse consumers, governments can issue nominal debt and apply continuous Markov strategies to finance their deficits while stabilizing the price of that debt.

However, the authors express concern that Bitcoin, described as a “useless piece of paper” lacking intrinsic value, disrupts this strategy. They contend that Bitcoin’s ability to trade at a positive price introduces multiple economic equilibria, leading to what they call a “balanced budget trap.” In this scenario, governments may find themselves compelled to balance budgets, contrary to their objective of sustaining permanent deficits.

To counteract this challenge, Amol and Luttmer propose that governments might need to tax Bitcoin or prohibit its use altogether. By imposing a tax equal to Bitcoin’s market value, they believe governments could eliminate alternative equilibria, allowing for the continued implementation of fiscal deficits without the interference of the cryptocurrency.

The paper highlights broader implications for fiscal policy, noting that assets like Bitcoin provide an independent means of wealth storage that undermines government efforts to manage economic stability. As a result, the authors argue that the rise of cryptocurrencies complicates the fiscal landscape, raising questions about the viability of ongoing deficits in a world increasingly influenced by digital assets.

The ongoing regulatory challenges posed by Bitcoin and other digital assets remain significant. Governments around the world continue to grapple with how to effectively regulate cryptocurrencies to ensure financial stability and prevent tax evasion. As the landscape evolves, the need for clear and coherent regulations becomes increasingly urgent. Without a unified approach, the interaction between traditional fiscal policies and the burgeoning cryptocurrency market could lead to unintended consequences for both economic stability and government financing.

In separate announcements, the SEC confirmed it has authorized the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE) to introduce options contracts tied to Bitcoin-based ETFs. The approval follows the SEC’s recent decision to greenlight a rule change proposal from Nasdaq, which allowed the listing of options for the iShares Bitcoin Trust (IBIT), a Bitcoin-holding trust, and produced favorable results.

“This is a competitive filing, as the Commission recently approved Nasdaq’s proposal to list and trade options on the iShares Bitcoin Trust,” the SEC noted. The regulatory body highlighted that options on Bitcoin funds would offer hedging opportunities, enhance liquidity, improve price efficiency, and reduce volatility. It also emphasized that listing these options would boost market transparency and efficiency.

In September, Jeff Park, head of alpha strategies at Bitwise, predicted a volatile but transformative period following the SEC’s approval of Nasdaq’s request to list BlackRock’s IBIT options. Park underscored the significance of Bitcoin’s limited supply, stating that “things will likely get wild” as options ETFs emerge.

“For the first time, the financial world will witness regulated leverage on a truly supply-constrained commodity,” Park said. “While regulated markets may face disruptions, Bitcoin’s decentralized nature means there will always be an alternative market that cannot be shut down—unlike GameStop during its trading frenzy. It’s going to be unbelievably fantastic.”

James Howells, the Wales-based engineer, claims the hard drive—discarded in 2013 during an office clean-up—holds a fortune in Bitcoin, now valued at nearly half a billion dollars. In a last-ditch effort to recover his lost wealth, Howells has turned to the courts.

As reported by WalesOnline, the lawsuit isn’t about the money itself but a tactic to compel the local council to allow excavation of the landfill site. Howells has proposed a cost-free recovery operation, assembling a team of experts who would handle the dig without burdening the city. He even offered Newport City Council 10% of the recovered Bitcoin, a potential windfall of tens of millions of dollars.

However, Newport City Council remains firm in its opposition. The council has dismissed the lawsuit as “weak” and expressed concerns over the environmental risks associated with excavating the landfill. They have cited possible ecological damage as the primary reason for their refusal.

The legal case, set for a hearing in December, marks a dramatic chapter in a bizarre saga that began over a decade ago. Back in 2013, when Bitcoin was still an obscure digital currency, Howells unknowingly discarded the hard drive containing 8,000 BTC while tidying his workspace. At the time, the loss was a modest financial hit. Today, with Bitcoin’s meteoric rise, it has become a massive financial regret.

Howells’ compensation claim is based on Bitcoin’s peak valuation earlier this year when the cryptocurrency hit an all-time high. Whether the court will entertain the case, and if the council’s environmental concerns can be overcome, remains to be seen.

There is a theory that has emerged within the cryptocurrency landscape blaming BlackRock, a notable entity. As the largest global investment manager, the possibility of BlackRock spearheading this monumental Bitcoin accumulation sends ripples of speculation through the industry. 

There are Blockchain analysts who have reported that the bitcoin transfers to the address are coming from Gemini and noted that the first major transaction occurred exactly one month after BlackRock filed for its spot bitcoin exchange-traded fund (ETF), causing speculation that BlackRock is behind this rapid accumulation.

As an OTC trading platform for Bitcoin, Gemini would most likely send BTC to a wallet address to fulfill major purchases. However, it is unusual for $3 billion worth of Bitcoin to be moved from their cold wallet to a new ho wallet without any reason. One theory is that someone was buying Bitcoin, and Gemini gradually transferred it to this new address.

The protagonist of this story is BlackRock, which is pursuing the ambitious goal of creating a spot Bitcoin ETF, which requires large ownership of the underlying asset. A substantial Bitcoin treasury must be safely held by the company to comply with regulatory requirements. 

Many ETF issuers have tried. Invesco, Valkyrie, and ARK are among the ETF players that have filed to launch spot bitcoin ETFs, but all got rejected by the SEC.

But everything changed when BlackRock, the world's largest asset manager, filed to launch its own Bitcoin ETF. Over the years, there have been more than 30 different Bitcoin ETF filings, and none of them have been approved.

The reason for bitcoin ETF rejections has always been the same. The SEC does not like the unregulated nature of the crypto space and claims it's rife with the potential for fraud. Their position isn't entirely unwarranted since there have been hacking incidents and many other fraudulent activities, but there's been no evidence that existing Bitcoin exchange-traded products have had problems.

The study, which gathered opinions from a cross-section of 250 institutional investors, highlighted a notable shift in outlook compared to previous evaluations. Impressively, 57% of the participants foresee an upward trajectory in crypto prices over the next 12 months. This marks a stark contrast from the preceding year, where a mere 8% held similar optimistic perspectives, according to Coinbase's previous study. Conversely, only 2% of respondents predict a downward trend, with 41% anticipating stability or a range-bound movement in crypto values.

Furthermore, the survey accentuates a significant inclination towards bolstering crypto holdings among respondents in the near future. Almost 60% of those surveyed expressed intentions to increase their crypto assets within the next three years. Interestingly, none of the participants plan to reduce their digital asset portfolios. Moreover, nearly half of the institutional investors currently absent from the crypto sphere express their intent to venture into this domain within the upcoming three years.

Diving into the preferences concerning asset classes poised for appealing risk-adjusted returns over the following three years, the survey unveils intriguing findings. While 54% of institutional investors perceive private equity as a substantial opportunity, 48% favor U.S. equities, and 41% acknowledge the potential of cryptocurrencies in this regard. Additionally, 35% of respondents identify emerging market equities as promising, while only 31% and 26% consider commodities and real estate, respectively, as lucrative avenues for returns.

Overall, the survey emphasizes an expanding confidence and interest among institutional investors in cryptocurrencies. It underscores an evolving investment landscape where digital assets are increasingly recognized as feasible and promising elements of diversified portfolios.

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